Debates flare up over SOLonomics

Blockworks Research analyst predicts 2025 will be a big year for economic changes on Solana

article-image

Artwork by Crystal Le

share

With crypto markets stuck in a holding pattern and many Solana projects delaying big announcements until the Breakpoint Conference, people seem to be bored.

To fill the momentary void, some of the online crypto world has taken up arguing about Solana’s tokenomic structure — not a new debate by any means, but one that we’re yet to really engage with in Lightspeed. 

The main complaint about SOL’s tokenomics these days seems to be that its supply is growing via inflation too quickly. Sources I spoke to seemed split on whether this is in fact a problem Solana should or will address, or if it’s all a non-issue.

Inflation on the Solana network refers to the ongoing creation of new SOL tokens, which are distributed as rewards to validators and stakers. This process incentivizes validators to secure and maintain the blockchain, ensuring network security and decentralization. In simpler terms, inflation is how Solana compensates validators for their essential role in processing transactions and securing the network, while also providing stakers with a yield for participating in the system.

When Solana first enabled inflation, it was set that the token supply would increase by 8% per year, but the inflation rate is set to fall by 15% yearly. Today, inflation is closer to 5%. Long term, it will decline to 1.5%. 

This 5% inflation figure is commonly cited as a reason to be more bullish on Ethereum relative to Solana, as the ETH supply is inflating at a rate of around 0.7% currently. Inflation puts downward pressure on the price of SOL, since the existing supply is diluted by new tokens. There’s a bit more nuance here, since you can argue that inflation amounts to a value transfer from non-stakers to stakers, since inflation rewards eventually are paid out to stakers. 

Still, in a new Lightspeed podcast episode, Blockworks Research analyst Dan Smith told me he predicts economic changes are coming for Solana in 2025.

“I feel this changing in the wind,” Smith said, where it “doesn’t feel necessary” to be emitting so many SOL tokens in inflation.

Nate, an anonymous figure helping run the Aurora validator, said he thinks the current inflation level creates a lot of “value extraction,” adding that it would probably be workable to cut validator rewards in half.

Still, Solana is a large network with several stakeholders, and a change like altering the inflation rate — and thus the amount of reward doled out to validators — would take some serious coalition building.

Switchboard co-founder Chris Hermida said he could see proposals coming up to lower inflation, but it doesn’t seem like there will be a “massive outcry” at the current inflation rate, especially when the rate is “(relatively) similar to many other large networks.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates (19).png

Research

Suilend has grown into the top money market and liquid staking provider on Sui. STEAMM, Suilend’s Superfluid AMM, presents a compelling avenue for growing market share within Sui’s DEX landscape and revenue generation for the protocol. Suilend’s multi-product suite position it well for owning market share across key verticals. While current metrics across the Sui ecosystem are likely inflated due to Sui Foundation incentive programs, SEND trades at amongst the lowest multiples in the lend/borrow sector, suggesting that a bull case for continued growth in the ecosystem may be mispriced.

article-image

Silk Road founder Ulbricht made a triumphant return to the Bitcoin Conference, 10 years on from sentencing

article-image

A Blockworks Research report looked at who could take up some of the marketshare in the launchpad space

article-image

Business-to-business stablecoin payments are on the rise, per a report from Artemis, Dragonfly and Castle Island

article-image

Crypto continues to do its thing: incentivizing behavior

article-image

Kraken will soon offer Backed ‘xStocks’ as Solana tokens

article-image

In a unanimous decision, the US Court of International Trade has ruled that Trump’s IEEPA tariffs are unlawful